Malaysia's capital is experiencing its first property boom since the 1997 financial crisis, but there are warnings that the dozens of new condos under construction are creating a market bubble.
The city is bristling with cranes as luxury apartments spring up around the Petronas Twin Towers -- formerly the world's tallest -- in the heart of the main shopping and business district known as the "Golden Triangle."
"The frantic construction activity is largely a response to high demand from urban dwellers seeking quality living, privacy, high security and a prestigious address within the Golden Triangle," Jones Lang Wootton Malaysia head of research Malathi Thevandran said in a recent report.
In the past two years the price of top condos has doubled to more than 1,000 ringgit (US$267) per square foot and even studios now start at 500,000 ringgit -- enough to buy a four-bedroom family house in the suburbs.
With promises of private lifts, saunas, rooftop gardens and bathrooms with views of the Twin Towers, apartments are selling quickly off the plans, and some projects are 70 percent sold despite being at least a year from completion.
Condos at the Troika, designed by renowned British architects Foster and Partners, are priced at about 3.0 million ringgit for a 9,000m2 spread, double what high-end counterparts were fetching two years ago.
But first among equals is The Binjai, part of the 40 hectare Twin Towers development built by KLCC Holdings, where the most sumptuous apartments are rumored to be fetching an unheard-of 15.0 million ringgit.
"I'm sure this will do well. It would be like having an address in London's Mayfair or Park Lane," said Goh Tian Sui, from property consultant C.H. William Talhar and Wong.
Analysts say the demand for upscale city-center condos is being fuelled by the desire to give up the gruelling commute on congested highways from suburbia to the Golden Triangle.
But as the race heats up, with ever more projects being launched, there are fears that the market may overheat.
Thevandran warns vacancy rates could rise in the near future due to the lack of a "significant increase in the number of expatriates working in Kuala Lumpur."
"The pent-up demand has been met. [By] just offering run-of-the-mill high-density projects, developers may run into problems trying to sell them," he says.
With estimates of some 10,000 units still under construction, industry experts say the boom could turn to bust within two to three years.
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